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OST-1999-5871

American Airlines, Inc.

American proposes to initiate service between the U.S. and China on April l, 200l, operating seven weekly nonstop frequencies between Chicago and Shanghai, and three weekly nonstop frequencies between Chicago and Beijing. American proposes to institute, on a year-round basis, seven weekly nonstop frequencies between Chicago and Shanghai, and three weekly nonstop frequencies between Chicago and Beijing, using 237-seat B777-223 aircraft. American does not presently serve China, other than through a codesharing arrangement with China Eastern Airways Limited via Los Angeles and San Francisco. American's proposed entry will provide substantial competitive benefits for passengers and shippers in the local Chicago- Shanghai and Chicago-Beijing markets, and in dozens of on-line cities served by American and American Eagle via Chicago.

Counsel:  American, Carl Nelson, 202-496-5647, carl_nelson@amrcorp.com

U.S.-China Air Services / American Airlines, Inc.

The proceeding in Docket OST-99-5539 involves new frequencies available under the U.S. -China bilateral air services agreement during the first two years of a three-year agreement. On June 22, 1999, American filed an application for a certificate of public convenience and necessity and for an allocation of all ten U.S. -China frequencies available to U.S. carriers in the third year of the U. S.-China frequency agreement. Under the Department's rules, answers to American's application (and competing applications) would be due on July 20, 1999. Unless the Department has issued a final order in the U.S. -China case prior to this July 20, 1999, answer date, the parties to that proceeding cannot know how many third-year U.S. -China frequencies they need because they will not know how many first and second year frequencies have been allocated to them in the Department's final order. If the incumbent carriers are required to respond to American's application before the final order in the U.S. -China case, they will, therefore, in order to protect their interests, have to file applications for frequency allocations that they may not, in fact, need. A final order issued after responses to American's application could also force these carriers to amend any responses filed on July 20, 1999, to reflect any allocation changes in the final order in Docket OST-99-5539. Such amendments could unnecessarily delay and complicate any proceeding relating to third-year frequencies.  United and Federal Express request that the date for answering American's application and filing competing applications in response to that application be suspended until after the Department has issued a notice requesting applications for third-year frequencies.

Counsel:  Federal Express, Rush O'Keefe, 901-395-5189 / United and Kirkland Ellis, Jeffrey Manley, 202-879-5161

Federal Express Corporation and United Air Lines, Inc.

By:  Paul Gretch

American Airlines, Inc.

An analysis of the Chicago catchment area reveals that the region has a substantial passenger traffic base, with extensive domestic service at Chicago by American and other carriers serving O’Hare. Chicago has a commanding advantage over Detroit, and generates more traffic than the corresponding area for Detroit. This results from Chicago’s more westerly location, making it a superior gateway for passengers from much of the Midwest and central states. Furthermore, Chicago’s Northern and central location in the U.S. will enable passengers throughout the Chicago catchment area traveling to and from China more efficiently via the Great Circle routing. Non-stop service between Chicago and China is long overdue.

Counsel:  Chicago and Winthrop Stimson, Kenneth Quinn, 202-775-9898, quinnk@winstim.com 

In Order 99-6-17, the Department said that it would call for applications. from interested parties in connection with the institution of a carrier selection case for U.S.-China authority. American's premature application serves no purpose other than to burden the Department and interested carriers with unnecessary motions and responsive pleadings.

Counsel:  Delta and Shaw Pittman, Robert Cohn, 202-663-8060, robert.cohn@shawpittman.com

Federal Express takes no position on American Airlines’ application for U.S.-China certificate authority or on its route integration request. However, Federal Express objects to American’s application to the extent it requests any U.S.-China frequencies.  If, in its final order, the Department fails to give Federal Express all 14 frequencies it has requested, Federal Express will likely seek an additional allocation of frequencies. Since there will be only 10 total frequencies available to the United States for allocation on April 1, 2001, grant of the allocation American requests will preclude additional entry by Federal Express. Ordinarily, in these circumstances, Federal Express would file a competing application. But, by its Notice of Action Taken dated July 13, 1999 in this docket, the Department has stated (1) that competing applications are not required at this time; (2) that it will call for applications for the April 1, 2001 frequencies at a later time; and (3) that it would "consider American’s application only in conjunction with those applications which we receive at that subsequent time." Because there are only a limited number of frequencies available in the U.S.-China market, and Federal Express expects to seek some or all of these frequencies when the Department calls for applications, Federal Express objects to grant of American’s application, but only to the extent it seeks an allocation of U.S.-China frequencies.

Counsel:  Federal Express, Rush O'Keefe, 901-395-5189

United hereby answers in opposition to American's application for all ten U.S. -China frequencies to the extent American's application would be mutually exclusive with a timely application to be filed by United as described above. In accordance with the Department's Notice of Action Taken, United will set forth its proposals for allocation of these frequencies in a subsequent and timely application and will express its position with respect to competing and mutually exclusive applications at that time.

Counsel:  United and Kirkland Ellis, Jeffrey Manley, 202-879-5161, jeffrey_manley@kirkland.com

UPS worked long and hard in cooperation with U.S. Government negotiators in obtaining the ten China frequencies and fourth designation which will become available on April 1, 2001. UPS intends to pursue that designation and the frequencies vigorously and provide the U.S. China market with much needed first competitive fully integrated express all-cargo service. UPS believes its designation would best serve the public interest, and will prove this in a fully documented proceeding before the Department Transportation. UPS also believes that the best decision will be reached by carriers' following orderly procedures which will be established by the Department. UPS appreciates the Department's position in the recent Notice' in this case that "We will consider American's application only in conjunction with those applications which we receive at that subsequent time." The Department made it clear on two occasions that it wanted applications for the April 2001 designation and frequencies "at a later date". Accordingly, UPS will file its application at such time as the DOT directs and will respond substantively to American's prematurely filed application in accordance with procedures to be established by the Department.

Counsel:  UPS and Kelley Drye, David Vaughan, 202-955-9600

American Airlines, Inc.

Notice U.S.-China Air Services (2001) filed by Acting Assistant Secretary for Aviation and International Affairs.  Applications should be filed by November 2nd, 1999. Answers due November 16, 1999. Replies due November 23, 1999. 

By:  Bradley Mims

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